13 March 2007
Inflationary pressure continues into the June quarter
Drought impacts on non-farm sectors begin to ease but petrol prices remain a key concern
The latest D&B National Business Expectations Survey shows...
Outlook for June quarter 2007
- 64% of business executives expect selling prices to be higher in the June quarter than the corresponding quarter in 2006
- Despite improvements, expectations for growth in profits remain in negative territory
- Business executives are predicting growth in sales for the first time in four quarters
Drought
- More than one quarter (26%) of firms surveyed indicated that the drought had negatively impacted business operations, a decrease of 7% since January
Interest rates
- 22% of firms surveyed have been negatively impacted by the one quarter per cent increases in interest rates in May, August and November
Petrol Prices
- The influence of fuel prices on business operations continues to be significant despite a decrease of 11% since January (now at 53%)
- Recent falls in petrol prices have positively impacted 19% of firms, this is an increase of 2% from January but is down from 51% and 31% in November and December respectively
Download the Mar-07 detailed survey's results.pdf (725KB)
Media Release
Key economic indicators show that the outlook for the June quarter is set to remain uncertain, with inflationary pressure and petrol price concerns continuing amidst signs that the impact of the drought on non-farming sectors is beginning to ease.
According to the latest Dun & Bradstreet (D&B) Business Expectations Survey, the number of manufacturing, wholesale and retail firms impacted by the drought has decreased 7% in the past month (now at 26%). There has also been a decrease (11%) in concern about petrol prices, however more than half (53%) of executives continue to indicate that fuel prices remain the most significant influence on business operations this year. This pressure is likely to remain following the recent spike in prices at the bowser.
Further complicating the outlook, improved sales and profits expectations are offset by signs that inflationary pressure will remain in the economy in the coming months.
According to Christine Christian, D&B Australasia CEO, businesses should pay attention to the signs of improvement amidst a continually challenging Australian business environment.
"Difficulties are set to continue for the upcoming quarter, with small and medium businesses likely to feel the greatest impact, but business must remain optimistic for the second half.
"An improvement in sales and profits is likely by mid-year and the easing of the impact of the drought is also a positive sign," Ms Christian said.
Close to one third (26%) of businesses expect an increase in profits as compared to the corresponding quarter in 2006 and growth in sales is predicted for the first time in four quarters, yet anticipated increases in selling prices from the same time last year indicate that inflationary pressure remains (see graph 1.0 - Expected Selling Prices).
Weak employment trends are also set to continue for the quarter ahead, with 11% of businesses anticipating a decrease in staff numbers, while capital investment expectations remain subdued with just 5% of executives expecting an increase.
Dun & Bradstreet's economic consultant, Dr Duncan Ironmonger, said the interim figures from the January and February surveys indicate that challenging business conditions will continue into the June quarter.
"Signs of improvement are beginning to show but the challenging conditions will remain for at least the next quarter.
"I hope to see further improvements in key indicators in coming months and if inflation remains subdued I would expect stable interest rates for the remainder of 2007," said Dr Ironmonger.
The D&B index for expected sales is up 13 points to five, with 29% of executives expecting an increase in sales and 24% expecting a decrease. The profits index is up 16 points to minus two, with 26% of executives expecting profits to rise and 28% expecting a fall.
Employment expectations are up one point to an index of minus two, with 9% expecting an increase in staff, and 11% expecting a reduction. Capital investment expectations are up two points to an index of one, with 5% expecting an increase and 4% expecting to cut spending. Inventories expectations are up four points to an index of minus four.
The selling prices index is up 14 points to an index of 60, with 64% of firms now expecting to raise prices and 4% expecting to decrease process.
For further information, or to arrange an interview, please contact:
Danielle Woods
Media
Hill & Knowlton
(02) 9286 1258
Dr Duncan Ironmonger
Economic Consultant
D&B
(03) 8344 2131
About the Survey
D&B Australasia conducts latest Business Expectations Surveys every month. Each quarter over 1,200 business owners and senior executives representing major industry sectors across Australia are asked if they expect increases, decreases or no changes in their upcoming quarterly Sales, Profits, Employment, Capital Investment, Inventories and Selling Prices. Since its introduction in Australia in 1988, the survey has proven to be a highly reliable measure of economic performance.
Note: The index figures used in the survey represent the net percentage of survey respondents expecting higher sales, profits, etc., compared with the same quarter of the previous year. The indices are calculated by subtracting the percentage of respondents expecting decreases from the percentage expecting increases.
About D&B
D&B is the world's leading provider of business-to-business credit, marketing and purchasing information and receivables management services. D&B manages the world's most valuable commercial database with information on more than 130 million companies.
Information is gathered in 193 countries, in 95 languages or dialects, covering 186 monetary currencies. The database is refreshed more than one million times daily as part of D&B's commitment to provide accurate, comprehensive information for its more than 150,000 customers.
The Australasian operations were bought out by the senior management group in August 2001. It was the first MBO of a wholly owned subsidiary in D&B's history worldwide.
Today Lazard Carnegie Wylie owns an approximate 90% stake in DBA and the local management team a 10% stake.
Strategies for future growth include developing DBA's commercial and consumer credit referencing business; expanding its receivables management outsourcing business; maintaining its lead in the development of unique credit and risk scoring products; and developing new products specifically tailored to the Australasian market. DBA currently employs over 500 people in Australia and New Zealand.
